Paying Pension Tax

Nick&Deb

When i retire (7 years to go) and my pensions are over the tax personal allowance 11K what can I do now to avoid paying any tax.

Cheers
Nick

Silvertabby

Well, you can stop paying pension contributions now, then take the maximum tax free cash at retirement. Would that halp?

Personally, I'd carry on accruing as much pension as possible, then enjoy the 80% income in retirement .

dunstonh

When i retire (7 years to go) and my pensions are over the tax personal allowance 11K what can I do now to avoid paying any tax.

Use phased flexi-access drawdown (where 75% of the income is taxable and 25% is tax free). That allows more than 11k in total without being taxed.

Or take less income so less of it is taxed. Maybe feed your S&S ISAs so you can use the pension to draw 11k and the ISAs above that amount.

Or pay more into the pension to get tax relief on 100% of your contribution knowing that only 75% of it will be taxed in retirement.

Dont let tax be the primary driver in your planning. Tax relief and paying of tax and tax free status etc are things you tweak to get the best out of but they should not be the primary consideration. What you need and meeting your objectives are the primary considerations.

maximumgardener

you don't mention your age but remember to feature your state pension in your pension planning as that amount will be taxed as income when you take it.
you could defer it if you have enough to live on or wish to but thats another question.deferring taking your state pension will obviously defer any tax due on that element of your income. all depends of course on your health and many other factors. health is wealth!!

xylophone

the tax personal allowance 11K

This is likely to be higher than £11,000 in seven years time.

It will increase to £11,500 in the tax year 17-18 and further increases are planned.

http://www.telegraph.co.uk/tax/income-tax/autumn-statement-higher-rate-income-tax-will-rise-50000-2020/

neilvw

Pledged by the Conservatives to be £12,500 or more by 2020.

Archi_Bald

Silvertabby wrote: »

Personally, I'd carry on accruing as much pension as possible, then enjoy the 80% income in retirement .

Me too. 80% of something is worth a lot more to me than 100% of nothing. Though I would probably put my spare money into an S&S ISA as I still like a bit of risk in my old age.

robber2

leave the country :-)

davieg11

robber2 wrote: »

leave the country :-)

I know you can still claim your state pension if you say moved to Spain but what is the tax free allowance if you moved abroad

jerrysimon

We had a pre-retirement course at work a while back (I leave in March) and the speaker said "count yourself lucky if you are required to pay tax on your pension, you are more fortunate than many who dont have big enough pensions to pay tax" !

Jerry

davieg11

jerrysimon wrote: »

We had a pre-retirement course at work a while back (I leave in March) and the speaker said "count yourself lucky if you are required to pay tax on your pension, you are more fortunate than many who dont have big enough pensions to pay tax" !

Jerry

Well with drawdown instead of Annuity the norm now that statement must have been a long while back